What shifts would occur in the is and lm and fe curves

Assignment Help Finance Basics
Reference no: EM131213888

Country initially has achieved both external balance and internal balance. The country prohibits international financial capital inflows and outflows, so its financial account (excluding official reserves transactions) is always zero because of these capital controls. The country has a floating exchange rate. An exogenous shock now occurs-foreign demand for the country's exports increases.

a. What shifts would occur in the IS, LM, and FE curves because of the increase in foreign demand for the country's exports if the exchange-rate value of the country's currency were to remain unchanged?

b. What change in the exchange-rate value of the country's currency actually occurs? Why?

c. As a result of the exchange-rate change, how does the country adjust back to external balance? Illustrate this using an IS-LM-FE graph. How does all of this affect the country's internal balance?

Reference no: EM131213888

Questions Cloud

Describe the two-phase commit process : Describe three possible approaches to storing data dictionary entries in a distributed system.
Required rate of return : What is the required rate of return of your fund in order to meet your need 18 years from now? (Write your answer in decimal format, for example, write 0.05 for 5%)
Make a power point presentation on insulator : Make a power point presentation with the topics suggested below. Insulator Properties of Insulating Material Insulating Materials for Cables
Efficient market hypothesis does this event emily : Considering the share price movements from 23rd to 25th August 2016,what would be the implication to the efficient market hypothesis - Which version of the efficient market hypothesis does this event Emily?
What shifts would occur in the is and lm and fe curves : What shifts would occur in the IS, LM, and FE curves because of the increase in foreign demand for the country's exports if the exchange-rate value of the country's currency were to remain unchanged?
Purchasing power parity : In you own words, please define purchasing Power parity than explain why absolute PPP does not normally hold.
What are the reactions of some of athletes team-mates : What are the reactions of some of his team-mates regarding his actions? Give at least two specific names and what they say about the situation.
What is a three-tier architecture : List the advantages of a client/server architecture as compared to a file server.
Compute the price of an american call option : Compute the price of an American call option on  the price of a zero-coupon bond (ZCB) that matures at time t=10 and that has face value 100.. The option has expiration t=6 and strike =80.

Reviews

Write a Review

Finance Basics Questions & Answers

  What would the gordon model value be

what is its value if the previous dividend was D0=$2 and investors expect dividends to grow at a constant annual rate of (1) -5%, (2) 0%, (3) 5% or (4) 10%?

  Determine the length of the cash conversion cycle

Determine the length of the inventory conversion period. Determine the length of the receivables conversion period. Determine the length of the operating cycle. Determine the length of the payables deferral period. Determine the length of the cash co..

  Calculate the break-even salvage

A project in Malaysia costs $4,000,000. Over the next three years, the project will generate total operating cashflows of $3,500,000, measured in today's dollars using a required rate of return of 14 percent

  Evaluate the effectiveness claims of the manager using the

the service unit or output for this department is the number of procedures performed. a static budget was prepared at

  Determining cash flows happen at ending of year

Suppose that all cash flows happen at the ending of year. SGP is presently financed with 30% debt at the rate of 10%. Acquisition would be made immediatel.

  M amp m wood corp uses no debt the weighted average cost of

mamp m wood corp. uses no debt. the weighted average cost of capital is 9. if the current market value of the equity is

  Virtual teams and communication

In this assignment, you will study the structure of virtual teams and the managerial skills required for managing them.

  In the us 90-day investments of similar risk have 4

suppose 90-day investments in britain have a 6 annualized return and a 1.5 quarterly 90-day return. in the u.s. 90-day

  Calculate calvins charitable contribution deduction

Calculate Calvin's charitable contribution deduction and carryover (if any) under the following circumstances. Calvin's AGI is $100,000 but the State Museum told Calvin that it plans to sell the painting.

  Calculate the first ten years of the income statement

Your Qualified Loan: 70% LTV, 6.5% Interest Rate, 20 years, 10 year balloon, DCR = 1.4. Calculate the first ten years of the income statement through the ATCF.

  What is the value of the bond

Mills Co has issued a 10% coupon interest rate, 10 year bond with a Sh. 1000 par value, which pays interest annually. The required rate of return of similar bonds is 10%. What is the value of the bond?

  Estimate of equity beta for frim a

If you find that equity beta is different between Frim A and its comparable firm in (a), how would you explain the difference? If you expect no difference explain why they are not different.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd